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On 12 February 2026, Singapore Budget 2026 was officially unveiled, introducing a series of structural adjustments across employment policy, taxation, enterprise innovation, internationalization support and capital markets.
While much attention has focused on higher Employment Pass (EP) and S Pass salary thresholds, the changes extend beyond work pass policy. Budget 2026 reflects continued recalibration of Singapore’s foreign workforce framework, alignment with global tax standards, expanded artificial intelligence incentives, enhanced overseas expansion support and deeper capital market development.
For overseas entrepreneurs, multinational groups, regional headquarters and families considering relocation, these updates may influence workforce planning, tax structuring, compliance strategy and long-term positioning in Singapore.
Below are eight key changes to note.
1. EP and S Pass Salary Thresholds Raised
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From 1 January 2027, new EP and S Pass applications will be subject to higher salary thresholds across both general and financial sectors. From 1 January 2028, renewals will follow the revised thresholds. Please refer to the illustration above for the updated figures.
For founders and professionals considering self-sponsored EP arrangements, where an individual registers a Singapore company and employs themselves under that entity, meeting the minimum EP salary requirement is mandatory before proceeding under the Complementarity Assessment Framework.
The Complementarity Assessment Framework evaluates salary percentile, qualifications, company workforce diversity and local employment contributions. A minimum score of forty points is typically required. However, if the EP salary floor is not met, even a strong score will not allow the application to proceed.
Salary planning therefore becomes a strategic consideration, as it affects not only eligibility, but also personal income tax exposure and compliance obligations.
2. Local Qualifying Salary (LQS) Increased
The LQS determines whether a local employee can be counted toward a company’s foreign worker quota calculations under Singapore’s manpower framework.
If a local employee does not meet the LQS, they may not be considered valid local employment for quota purposes.
From 1 July 2026, the LQS for full-time local employees will increase, with part-time hourly rates also adjusted accordingly.
This revision may affect companies renewing EntrePass or managing foreign worker quotas. Since LQS employees are generally required to maintain Central Provident Fund (CPF) contributions over a specific period, hiring and payroll planning must be structured in advance.
3. 40% Corporate Income Tax Rebate (YA2026)
Singapore Budget 2026 introduces a forty percent Corporate Income Tax Rebate for Year of Assessment 2026.
The combined cap for rebate and cash grant is S$30,000 per company.
Companies that operational and have employed at least one local employee in the preceding year may receive a minimum of S$1,500 in rebate or cash grant, even if their corporate income tax payable is low.
This measure is intended to cushion short-term business cost pressures.
4. Expanded Artificial Intelligence (AI) and Enterprise Innovation Support
The Enterprise InnovationScheme will expand its tax deduction scope to include AI compliance activities for Year of Assessment 2027 and 2028.
Qualifying expenditure will be capped at S$50,000 per year, with up to 400% tax deduction available.
The Productivity Solutions Grant will also be enhanced, broadening support for digitalization and AI enabled solutions.
In addition, the Champions of AI program will provide customized support integrating business transformation and workforce training, targeting enterprises seeking end to end AI adoption.
5. Enhanced Internationalization Incentives
Singapore continues to encourage overseas expansion and regionalization through enhanced internationalization support measures.
From 1 April 2026, the Market Readiness Assistance (MRA) scheme will increase funding support for eligible small and medium enterprises from up to 50% to up to 70%, while maintaining the cap of S$100,000 per new market per company.
The Double Tax Deduction for Internationalization automatic deduction mechanism will be broadened, allowing more qualifying activities to benefit from 200% tax deduction.The annual cap will be increased from S$150,000 to S$400,000.
The Enterprise Financing Scheme will also be strengthened. From 1 April 2026, higher limits will apply to small and medium enterprise fixed asset loans and trade financing loans. The overall borrowing group cap across Enterprise Financing Scheme facilities will be raised to S$50million.
These adjustments provide greater flexibility for companies expanding production capacity, entering new markets and managing cross-border working capital.
6. S$40 Billion Commitment to Strengthen Financing Ecosystem
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Budget 2026 allocates a total of S$40 billion to strengthen Singapore’s financing ecosystem and capital markets.
The objective is to make long term funding more accessible to growth stage companies and to better integrate financing, public listing and secondary market liquidity.
The allocation includes strengthening Startup SG Equity and expanding coverage to growth stage companies, introducing the second tranche of the Anchor Fund co-invested with Temasek to anchor quality companies listing in Singapore, and injecting additional funds into the Financial Sector Development Fund to expand the Equity Market Development Program and enhance the depth and activity of Singapore’s public equity market.
7. 15% Global Minimum Tax Implemented
Singapore has legislated the implementation of Base Erosion and Profit Shifting Pillar Two and introduced both a Domestic Top up Tax and a Multinational Enterprise Top up Tax.
These measures ensure that eligible large multinational enterprise groups achieve an effective tax rate of 15%.
The regime generally applies to multinational groups with revenue reaching EUR750 million. The relevant registration process will begin in May 2026.
For small and medium enterprises, the immediate tax burden may not change. However, cross-border clients and supply chains may impose higher compliance, disclosure and transfer pricing requirements. For large groups and regional headquarters, effective tax rate calculations and top up tax implications must be reassessed beyond nominal headline rates.
8. Charity and Social Participation Measures Extended
Budget 2026 proposes the establishment of the SG Partnerships Fund, allocating S$50 million to support ground up civic initiatives.
In addition, the 250% tax deduction for qualifying donations to Institutions of a Public Character, as well as the 250% tax deduction under the Corporate Volunteer Scheme, has been extended until the end of 2029.
Singapore Budget 2026 underscores Singapore’s ongoing efforts to balance workforce policy, tax alignment, enterprise innovation and capital market strengthening. For companies and families assessing Singapore as a base for operations or relocation, understanding these structural shifts will be increasingly important in navigating the evolving regulatory and economic landscape.
